Question

Leon Jackson invests $48,800 at 8% annual interest, leaving the money invested without withdrawing any of the interest for 8 years. At the end of the 8 years, Leon withdraws the accumulated amount of money.

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Compute the amount Leon would withdraw assuming the investment earns simple interest. (Round answers to 0 decimal places, e.g. 458,581.)

Total withdrawn

$enter total withdrawn in dollars rounded to 0 decimal places

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Compute the amount Leon would withdraw assuming the investment earns interest compounded annually. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Total withdrawn

$enter total withdrawn in dollars rounded to 0 decimal places

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Compute the amount Leon would withdraw assuming the investment earns interest compounded semiannually. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Total withdrawn

$enter total withdrawn in dollars rounded to 0 decimal places

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Answer 1

Solution 1:

Total withdrawn amount = Principal + Interest = $48,800 + $48,800*8%8* = $80,032

Solution 2:

Interest rate = 8 %

Nos of periods = 8 years

Amount withdrawn = $48,800 * (1+0.08)^8 = $48,800*1.85093 = $90,325

Solution 3:

Interest rate = 8 %, 4% semiannual

Nos of periods = 8 years, 16 semiannual period

Amount withdrawn = $48,800 * (1+0.04)^16 = $48,800*1.87298 = $91,401